Money and Markets - Financial Advice | Financial Investment Newsletter
Skip to content
  • Home
  • Experts
    • Martin D. Weiss, Ph.D.
    • Mike Burnick
    • Sean Brodrick
    • JR Crooks
    • Larry Edelson
    • Bill Hall
    • Mike Larson
    • Jon Markman
    • Mandeep Rai
    • Tony Sagami
    • Grant Wasylik
    • Guest Contributors
      • Amber Dakar
      • Peter Schiff
      • John Sheely
      • Claus Vogt
  • Blog
  • Resources
    • FAQ
    • Personal Finance Corner
      • Hot Tips
      • Investments
      • Money & Banking
      • Consumer Loans
      • College Savings
      • Retirement
      • Credit & Debt
      • Taxes
      • Insurance
      • Life & Home
      • Investment Portfolios
    • Links
  • Services
    • Premium Membership Services 
      • Money and Markets Inner Circle
    • Trading Services
      • Marijuana Millionaire
      • Tech Trend Trader
      • Calendar Profits Trader
      • E-Wave Trader
      • Money and Markets’ Natural Resource Investor
      • Money and Markets’ Natural Resource Options Alerts
      • Supercycle Investor
      • Wall Street Front Runner
      • Pivotal Point Trader
    • Investment Newsletters
      • Real Wealth Report
      • Safe Money
      • Disruptors and Dominators
      • The Power Elite
    • Books
      • The Ultimate Depression Survival Guide
      • Investing Without Fear
      • The Standard & Poor’s Guide for the New Investor
      • The Ultimate Safe Money Guide
    • Public Service
  • Media
    • Press Releases
    • Money and Markets in the News
    • Media Archive
  • Issues
    • 2017 Issues
    • 2016 Issues
    • 2015 Issues
    • 2014 Issues
    • 2013 Issues
    • 2012 Issues
    • 2011 Issues
    • 2010 Issues
    • 2009 Issues
    • 2008 Issues
    • 2007 Issues
  • Subscriber Login
  • Weiss Education

Money and Markets: Investing Insights

Economy losing steam! Three moves to make now!

Mike Larson | Friday, June 3, 2011 at 7:30 am

Mike LarsonI sure hope they have a lot of lipstick in Washington and on Wall Street. Because they’re going to need it to gussy up the latest economic news!

Just over the past several days, we’ve learned that …

* The economy created a pathetic 38,000 jobs in May! That was a massive 78 percent plunge from April and the worst reading since September. It also missed forecasts for a reading of 175,000 by a country mile!

These were the ADP Employer Services figures, and the government’s “official” data always differ somewhat. But ALL the latest numbers tell the same story: The job market is losing steam!

* Manufacturing activity is decelerating fast! The Institute for Supply Management’s benchmark index plunged to 53.5 last month from 60.4 in April. That was the lowest reading in 20 months, and far worse than “experts” were looking for! The service sector index also tanked.

* Home prices are setting fresh lows! The S&P/Case-Shiller Index fell 3.6 percent in March. That year-over-year decline was the worst since November 2009, and it leaves prices in 20 top metropolitan areas at the lowest level in eight years.

Latest report shows home prices continue to fall.

Latest report shows home prices continue to fall.

Meanwhile, April housing starts plunged almost 11 percent and permit issuance dropped 4 percent … pending home sales just tanked 12 percent — far worse than the 1 percent decline economists were expecting … and industrial production ground to a halt in April, confounding economists who were looking for a gain.

Treasury Secretary Timothy Geithner wrote an op-ed back in August 2010 called “Welcome to the Recovery.” Maybe he should have named it “Mission Accomplished” … because his starry-eyed optimism seems every bit as misguided as President Bush’s a few years earlier.

Economy’s Achilles Heel? It Was
“Bought and Paid For” in Washington!

How could the economy possibly be weakening again, when we just officially emerged from recession two years ago?

How could this possibly happen, when the Paul Krugmans of the world promised that if we just borrowed and spent a few gazillion dollars, everything would be peachy?

And how could we be staring down the barrel of a serious slowdown, when Fed officials like Ben Bernanke swore on a stack of bibles that quantitative easing would save the economy?

Because “bought and paid for” recoveries are inherently unstable and self-defeating! If governments and central banks could truly vanquish the business cycle by just printing, borrowing, and spending all they wanted with no consequences, wouldn’t every single one of them have done it before?

The reality is, the economic and political fallout from borrowing and spending so much eventually becomes too much to bear— and you just can’t do it anymore! I believe that’s where we are now …

The Treasury Department is strapped for cash.

The Treasury Department is strapped for cash.

The $14.3 trillion debt ceiling is putting shackles on Congress and the administration. So are global creditors and ratings agencies, who are increasingly punishing nations that think they can run up huge deficits and debt burdens.

Meanwhile, the Fed’s QE programs have wildly inflated commodity prices and jacked up our cost of living. But because the Fed can’t print jobs and boost wages — only fuel speculation by pumping the asset markets full of easy money — we’ve hit a wall. The “real economy” can no longer support these artificially inflated “financial economy” prices.

Immediate Steps to Take!

First, if you haven’t already taken some profits off the table on your long positions, please do so now. This is the time to pare down your risk levels, regardless of what you’re hearing on CNBC.

Second, dump any stocks exposed to the weakest parts of the economy. That would include sectors like banking, construction, and retail.

Until next time,

Mike

Mike Larson

Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.

{ 1 comment }

David X Friday, June 3, 2011 at 11:28 am

“How could this possibly happen, when the Paul Krugmans of the world promised that if we just borrowed and spent a few gazillion dollars, everything would be peachy?”

Amazingly, Krugman says that we didn’t spend enough in his op-ed in the NY Times: http://krugman.blogs.nytimes.com/2011/02/14/the-great-abdication/

We were told that we must pass the stimulus bill or “experience a crisis unlike any we have seen in our lifetime” and that unemployment would be much worse without the “stimulus”. If we went along with the stimulus (pork) spending, unemployment would top out at 8%.

We allow these central planners to wreck our economy out of fear and because we lack faith in the free market (whatever you call what we had prior to the collapse, it wasn’t a free market).

Previous post: Economy losing steam! Three moves to make now!

Next post: Shocking job news! What to do …

  • Sign Up Free

    To receive editorial updates from The Weiss Center for Investor Advancement and Money and Markets, type in your email address. We respect your privacy

  • About Us
  • FAQ
  • Legal
  • Privacy
  • Whitelist
  • Advertising
  • Contact Us
  • ©2025 Money and Markets - Financial Advice | Financial Investment Newsletter.
Weiss Research
Weiss Research, Inc., founded in 1971, has a long history of providing research and analysis designed to empower investors with information and tools to make more informed, independent decisions along with an equally long history of public service. [More »]